USCG Documentation and Which State to use

[brantleychuck]

Originally Posted by Brown7477

Correct


Sales tax is paid at the time of registration, so sales location would be irrelevant if you reside or register it in another State.

This is true BUT.... My boat was purchased and remains in Florida. California ( where I live) has been hounding me relentlessly for almost a year. I have sent them documents 3 times and still they ask for more. Common sense means nothing to these comrades.
My mistake was putting my address here in Cali on the CG. boat doc, the hailing port is Miami


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[jmschmidt]

You can home port (or the hailing port as its called) a US documented vessel in any state you want, Idaho, Nevada, any where you want. Pick a state that does not require state registration of a documented vessel and that also does not have any personal property or luxury tax. There are a few, like Hawaii. However, do not moor you boat for very long in any state that has either a registration requirement or a personal property tax.

[Group9]

Originally Posted by sailpower

So what happens after he registers in a state like RI or Mississippi but finds himself in, say MD for 60 days or what ever their trigger period is?

At that point MD wants their 6% use tax and will credit $0 that he didn't pay elsewhere. He thus owes MD 6% so he saved nothing and went to a lot of unnecessary trouble for no gain.

The State Use tax component is what makes these avoidance schemes ultimately useless.

Well, if he actually moves there, you have a point. But, as long as you don't spend more than 60 days in Maryland, or 90 in another state, or whatever, I think having a valid state registration might save you some grief.

Being in a state like Florida, down in the southern part, I could see getting hit with being there over 90 days, even as a cruiser just passing through and taking their time. But, how hard is it in Maryland, to dip down to Virginia ever 59 days, and always have paperwork in the form of marina receipts or the like to show you haven't been there for 60 day, yet?

I don't think we are talking about living in a state and trying to beat their tax. I thought we were talking about, passing through a state as a cruiser, and worrying about not getting through quick enough, or visiting too long, and having the state try and make us an involuntary resident for tax purposes.

[skipmac]

Originally Posted by sailpower

So what happens after he registers in a state like RI or Mississippi but finds himself in, say MD for 60 days or what ever their trigger period is?

At that point MD wants their 6% use tax and will credit $0 that he didn't pay elsewhere. He thus owes MD 6% so he saved nothing and went to a lot of unnecessary trouble for no gain.

The State Use tax component is what makes these avoidance schemes ultimately useless.

I cannot say for certain about MD but in Florida, as has been mentioned in previous posts, if the boat is purchased, owned and used legitimately outside the state for at least six months then Florida will NOT charge sales and use tax if the owner later moves the boat to Florida, even if the owner becomes a full time, legal resident of the state.

This I personally verified by phone calls to the FL Dept of Revenue and FL FWC.

Other states I believe have similar policies but you should confirm that in each state.

[Brown7477]

Originally Posted by Dirk13

Another option would be to register your boat in Rhode Island.

There is no sales tax for boats in Rhode Island (unless you bought your boat prior to July 29, 1993)

Also you do not have to be a resident of Rhode Island in order to register your boat in RI.

Dirk

I was going to go with Delaware because it was previously but might look into RI. I know DE doesn't have an online system for registering but maybe RI does. I'll look into it.
Thanks

[jmschmidt]

More misinformation on this subject. The term "home port" is not used on USCG documentation. "Hailing Port" is the name (usually a city) on the transom along with the state initials or other designation if foreign (such as "Georgetown - CI for Cayman Islands). The boat may never have been to the Cayman Islands. There are thousands of vessels registered in the Marshal Islands that haven't been near the place. Likewise, thousands of yacht have US cities (like Boise, ID) as hailing ports on their documents that are hundreds of miles from the nearest body of water big enough to float them.

Hawaii has no personal property tax and does not require documented vessels to have state registration numbers. If your dingy is identified as "Tender to" or "T/T" (followed by your vessel's name) it does not have to have a state registration either. The transom of the yacht called SEADOG may say HONOLULU with HI below it. Your dinghy would say TENDER TO SEADOG 123456. I add the document number of the main vessel as well to the dinghy's T/T designation.

Also, setting up an LLC in Hawaii cost $50 and the annual renewal is $15, cheaper if you do it online with a credit card. Sales and use tax or general excise tax may be payable in Hawaii depending on how old the boat is and how long you have owned it. We imported a five-year old French Flag vessel built in South Africa to Hawaii, reflagged it US, no import duty (SA is exempt), no state sales tax, no state registration.

If you have exposure to the local legal thievery, ie taxes, moving out of your slip every 59 or 89 days or whatever the local law is, seems reasonable to me. If you're not sailing somewhere every 59 or 89 days sell the boat and go back to farming. But, like the man said, stay to hell out of California, if your marine is in San Francisco Bay its a long way out of state.

[skipmac]

Originally Posted by jmschmidt

More misinformation on this subject. The term "home port" is not used on USCG documentation. "Hailing Port" is the name (usually a city) on the transom along with the state initials or other designation if foreign (such as "Georgetown - CI for Cayman Islands). The boat may never have been to the Cayman Islands. There are thousands of vessels registered in the Marshal Islands that haven't been near the place. Likewise, thousands of yacht have US cities (like Boise, ID) as hailing ports on their documents that are hundreds of miles from the nearest body of water big enough to float them.

Hawaii has no personal property tax and does not require documented vessels to have state registration numbers. If your dingy is identified as "Tender to" or "T/T" (followed by your vessel's name) it does not have to have a state registration either. The transom of the yacht called SEADOG may say HONOLULU with HI below it. Your dinghy would say TENDER TO SEADOG 123456. I add the document number of the main vessel as well to the dinghy's T/T designation.

Also, setting up an LLC in Hawaii cost $50 and the annual renewal is $15, cheaper if you do it online with a credit card. Sales and use tax or general excise tax may be payable in Hawaii depending on how old the boat is and how long you have owned it. We imported a five-year old French Flag vessel built in South Africa to Hawaii, reflagged it US, no import duty (SA is exempt), no state sales tax, no state registration.

If you have exposure to the local legal thievery, ie taxes, moving out of your slip every 59 or 89 days or whatever the local law is, seems reasonable to me. If you're not sailing somewhere every 59 or 89 days sell the boat and go back to farming. But, like the man said, stay to hell out of California, if your marine is in San Francisco Bay its a long way out of state.

Not sure I would call it misinformation. Just use of the wrong terminology. The wording on the USCG documentation form, section E (I just mailed my renewal today ) is indeed "Hailing port including state (to be marked on vessel)"

Didn't know about Hawaii. Thanks

[Brown7477]

It's kind of crazy how all these states want to stick their hand in the pockets of boat owners as deep as possible. But I guess that's the norm for everything pertaining to boat ownership.

[Jman]

I guess I just don't get it. The OP never indicates which state he is actually looking to operate the boat out off. Presumably if he needs the the money to "to get sailing" he his going to be working on the boat somewhere - presumably near his residence - for some period of time. After that probably operating the boat near his residence for some more time.

Trying to avoid the use tax in his home state, especially if he intends to operate the boat there is at best unethical, and probably illegal. If he does not like the use tax laws of his state perhaps he should consider moving, or getting involved in state wide politics to fix the problem. If he attempts to use loopholes by in effect saying "I intend to operate this boat out of this tax free jurisdiction" and in fact never operating the boat the out of there, but immediately putting it into service in his fully taxed jurisdiction, then I hope he gets caught, taxed and fined.

Now after he has satisfied the sales tax obligation (if any, as it has been noted the are many states that have no use tax) of the state that he intends to primarily operate the boat out of, he should be all set. So long as he operates the boat there for 6+ months he should be free to travel around the country, comfortable that he is a law abiding citizen, having satisfied his financial obligations. If he decides to start operating the boat primarily from a different state (having given up the heroic fight fight for reduced use tax in the capitol building of his home state, he has decided to boycott and try another state), then he should review the laws as they apply to relocation for that state. They will likely apply to his cars and maybe other personal property as well.

All of this has absolutely nothing to do with the USCG Hailing Port, which it appears that he wants to use to try and fool his home state into thinking the boat is not operated there. He can put whatever port he wants on the stern and documentation, it has nothing to do with use tax obligations.


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[oldragbaggers]

Originally Posted by Brown7477

It's kind of crazy how all these states want to stick their hand in the pockets of boat owners as deep as possible. But I guess that's the norm for everything pertaining to boat ownership.

It's the same with everything you own and buy from the pair of jeans at Walmart, to your car and your house. Either sales or property tax in some form or the other applies to most everything except food and medicine. What would be truly crazy is if the government somehow DIDN'T charge either sales or property tax on boats, being a luxury item for most people.

If it's a luxury item, why not sales tax? You would pay it if you bought a computer, or a stereo or big screen TV. If it's your home, why not property tax? You would pay it for your land based house? Why would anyone assume that a boat should somehow be a "free ride?"

[denverd0n]

Originally Posted by Brown7477

It's kind of crazy how all these states want to stick their hand in the pockets of boat owners as deep as possible. But I guess that's the norm for everything pertaining to boat ownership.

It's not really crazy, and it's not just boat ownership. Governments have to be funded somehow and sales/use tax is a common way that puts the burden on people with money to buy things, rather than on those who spend little because they have little.

Once the sales/use tax is paid, most states only want some modest registration fee if you stay in their state long enough to benefit from the services that they provide. That doesn't seem at all "crazy" to me. To the contrary, it seems quite reasonable.

Now, of course, there are states that charge a personal property tax on pretty much everything that you own. As a result, you have to pay, and pay, and pay again for all of your "stuff." That does, to me at least, seem a bit over the top. The good news, though, is that relatively few states are like that, and so they are fairly easy to avoid.

As others have said, the thing to do is to decide where you want to keep the boat in order to get the best/most use out of it. Then accept that you are going to have to pay some fees/taxes to that state. Putting the boat someplace where it is inconvenient to use--just so that you can avoid a bit of taxes--is just foolish. If avoiding taxes is more important than using and enjoying the boat then avoid all of the taxes and just don't buy it in the first place!

[oldragbaggers]

Originally Posted by denverd0n

It's not really crazy, and it's not just boat ownership. Governments have to be funded somehow and sales/use tax is a common way that puts the burden on people with money to buy things, rather than on those who spend little because they have little.

Once the sales/use tax is paid, most states only want some modest registration fee if you stay in their state long enough to benefit from the services that they provide. That doesn't seem at all "crazy" to me. To the contrary, it seems quite reasonable.

Now, of course, there are states that charge a personal property tax on pretty much everything that you own. As a result, you have to pay, and pay, and pay again for all of your "stuff." That does, to me at least, seem a bit over the top. The good news, though, is that relatively few states are like that, and so they are fairly easy to avoid.

As others have said, the thing to do is to decide where you want to keep the boat in order to get the best/most use out of it. Then accept that you are going to have to pay some fees/taxes to that state. Putting the boat someplace where it is inconvenient to use--just so that you can avoid a bit of taxes--is just foolish. If avoiding taxes is more important than using and enjoying the boat then avoid all of the taxes and just don't buy it in the first place!

[Maka]

Regarding using a corporation to own a boat and or slip to save taxes: If it is a Sub S or similar corporation that lets you deduct the corporate expenses from your personal taxes whether the corporation generates income or not.
Granted that a Sub S corporation must show some income with in 5 years, but this is an easy one. Rent the boat for an evening to a friend to have a little party on the boat w out ever leaving the slip. To some one for a photo shoot, who never goes on board. Be creative. Just be honest in the process.
Your accountant can define the parameters for you.

The advantage of having the Corporation own the slip as well, is that the new owner of the corporation does not have to get on a waiting list for a slip in a crowded and popular marina or harbor. This is a common practice for commercial boat operations as well as private boat owners.

[svlamorocha]

Originally Posted by belizesailor

I can tell you that neither the State of Florida nor Texas share that point of view. In both cases, if the boat is physically in their State beyond a certain number of days (90 in the case of FL) then they will come after you for sales tax...even if the boat is registered in another State.

That is why the tax is called "sales and use tax".

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[Jason Flare]

In CT, for example, the 60 days in the state only applies if you do not rent a seasonal mooring or slip. If you rent a SM or slip in CT you have to register. To register you have to have paid sales tax in some state or pay the 6.25% CT sales tax.

If you paid 5% in some other state you are responsible to CT for the additional 1.25%.